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Include a Letter with Your Estate Plan

You have your vital documents in order, and you keep them current. You have a will or trust. Your living will, also called health care power of attorney is complete, and you have spoken with the person you have named as your health care decision-maker about your end-of-life wishes. You have taken care of all your legal and financial issues, including final instructions and a list of who will receive particular items.

While your loved ones will appreciate that you have thoughtfully taken care of these essential issues and will not leave them with a mess to clean up one day, there is one more thing you should do. You need to sit down and create something your family members and close friends will treasure for the rest of their lives. You should write and include a letter with your estate plan.

Words are Important

People can carry sadness for a lifetime because a parent never said “I love you” to the child. The parent might be shocked that the child felt unloved. Some people think they do not have to tell someone they love them, because they show their affection in the daily tasks of providing a home and upbringing for the child.

In addition to the worldly goods that you give to your loved ones, leaving a “last letter” behind can help them deal with their grief at losing you. You can use the letter to accomplish things you might not have done as much as you wish you had. You can write one letter that speaks to several people or write multiple letters.

What to Put in the Letter

You can begin by telling the people in the letter that they are important to you. You should tell them that you love them and let them know in writing how proud you are of them. No matter how many times you have spoken these words to them before, they can hold a letter in their hands for years and read it over and over.

Sometimes people write letters of apology to those they have hurt at some point in their lives. Apologies are helpful in making peace with one’s life. If you cannot bring yourself to say the words during your lifetime or you anticipate that the person would respond in an unacceptable manner, you can do your part by putting the apology in a letter.

If you can forgive someone who did something wrong to you, it can be cathartic to write a letter of forgiveness. These letters take great care, as they can be interpreted as sanctimonious or judgmental.

What Not to Put in the Letter

While it might be tempting to take one last jab at someone you feel wronged you, the last letter is no time to be spiteful. If you cannot write something kind to a person, do not write anything.

What to Do with the Letter

All you need to do is tuck the letter in with your legal papers. One day, when your loved ones go through your will or trust, they will get a pleasant surprise and something to cherish.

You should talk with an elder law attorney near you about the ways that your state rules might vary from the general law of this article.


AARP. “How to Write a Last Letter to Your Loved Ones.” (accessed January 8, 2019)

Should You Play Banker for Your Adult Children?

Many seniors are lending money to their adult children. The kids get a loan that might have cost them thousands of dollars of fees with a traditional lender, and the parents get an income stream that gives a better return than a savings account would. At least – that is what happens when everything goes as planned. If you are thinking about making a significant loan for your child to buy a house or car, you need to evaluate this question – should you play banker for your adult children?

Reasons That Parents Make Loans to Their Adult Children

In addition to the obvious motive of wanting to help their children, many parents want to find ways to make their liquid assets work harder for them. Let’s say you liquidate a significant portion of your investments out of concern about the stock market. In the past, you could dump that money into a savings account that would earn interest and be safer than the stock market.

The problem now is that savings accounts have extremely low yields. The average savings account currently pays only 0.06 percent interest per year. Many of the big, national banks pay only 0.01 percent. Making a loan to your child with an interest rate of 2.5 or 3 percent, can help the parents keep up with inflation. A savings account with a balance of $100,000 and a 0.01 percent yield will generate only $10 a year in interest. Lending your child the same $100,000 at 2.5 percent will get you $2,500 a year in interest.

How to Take the Idea for a Test Drive

Understandably, many parents worry about making a large loan to an adult child. Not to worry – you can make a loan for the down-payment instead of the entire mortgage. You risk a smaller amount, and both you and your child can find out if this type of arrangement works for all of you.

Depending on the amount of the mortgage and the total down-payment, the down-payment loan can help your child qualify for the mortgage and not have to pay for Personal Mortgage Insurance (PMI). PMI can add $100 or more to your child’s monthly mortgage payment.

Downsides of Parent “Bankers”

It could be devastating to you financially if your child does not make the loan payments. This situation could cause you to have to work for many extra years or not be able to retire at all. You could find yourself in poverty when you retire. You should only lend money that you can afford to lose.

You need to consider how lending a substantial sum of money will affect the amount of money your other children inherit. You should make sure that you work with your estate planner to protect your estate’s right to the money. Finally, consider how the loan will affect your relationship with your child and your other children. The Thanksgiving meal can be awkward, when family members borrow money from each other.

Tax Issues of Lending Money to Your Children

You must create the proper documents, like a mortgage or promissory note, to keep the IRS from treating the loan as a gift and imposing a steep gift tax.  It is necessary to charge at least the rate of interest that the IRS requires. These rates change every month, so you will need to check and re-check. You will also have to register the mortgage with an approved company for your children to take the mortgage interest deduction.

Legacy Planning Law Group can help you prepare the documents you will need to memorialize the loan and help you strategize how to make the loan work with your estate plan. We can explain how Florida’s laws might be different from the general law of this article.


CNN. “Savings accounts with the highest yields.” (accessed January 17, 2019)

AARP. “Should You Give Your Kids a Mortgage?” (accessed January 16, 2018)

How Can a Trust Keep My Family From An Undesirable Lifestyle?

Some people are hesitant to use trusts in their estate planning. Some have the notion that if you leave money in trust, it will make “trust fund babies” of your children or grandchildren.

You may be afraid that they’ll become spoiled brats, who do nothing but spend money they haven’t earned or invest foolishly.

FEDWeek’s recent story, “Using a Trust as an Incentive for Your Heirs” explains that trust distributions can be limited to modest amounts or left to the discretion of the trustee, who’ll manage the trust assets.

The article suggests that if you do leave money in trust, you should avoid the common practice of providing for distributions at the ages 25 and 30.

That’s because at those ages, most people are better off finishing their education and establishing their careers. Giving them a bagful of money at that age, might decrease their drive to pursue a meaningful career.

One way to do this is what’s called an “incentive” trust. This type of trust offers rewards to trust beneficiaries who accomplish specific goals.

With an incentive trust, the beneficiaries might get a particular amount of money for getting higher education degrees, attaining certain levels of earned income or volunteering at a church or in the community. For instance, your trust could be drafted by your estate planning attorney to state that the trustee will distribute to each of your grandchildren a certain percentage (such as 25%) of earnings each year, up to a certain amount. This could be tied to a requirement that you make.

Another way to go about this trust, is to leave the distributions to the discretion of the trustee. The trust might detail the types of activities that will be rewarded, then permit the trustee to make appropriate distributions.

When you’re going to depend so much on the judgment of the trustee, for this type of arrangement to work, it’s critical to choose a highly-qualified trustee.

The trustee could be a relative, friend, or professional advisor. He or she must be able to empathize with your beneficiaries but still make prudent decisions about distributions. In addition, add a plan for trustee succession, in case your first choice becomes unable or cannot serve.

Reference: FEDWeek (January 17, 2019) “Using a Trust as an Incentive for Your Heirs”